Which of the Following Statements Is NOT True

question 39

Multiple Choice

Which of the following statements is NOT true?

• A)Operating leverage refers to the extent to which a company's net income reacts to a given change in sales.
• B)Companies that have higher fixed costs relative to variable costs have higher operating leverage.
• C)When a company's sales revenue is increasing, high operating leverage is a good thing because it means that profits will increase rapidly.
• D)When a company's sales revenue is decreasing, high operating leverage is a good thing because it means that profits will decrease at a slower pace than revenues decrease.